Fork in the Road

s01_RTX14HWXYou know some big shifts are going on when the Washington conventional wisdom is so separated from the rest of the country. This morning the New York Times’ Peter Baker writes about Obama’s “management” of the multiple foreign policy crises, without ever once asking just why these civil conflicts are ours to manage. Think about Syria, Ukraine and Gaza. They are all essentially sectarian wars around local power struggles. This is not Hitler trying to rule the world, and yet somehow Baker assumes this is our problem to manage. Does the Chinese President wake up each morning thinking about he should manage these conflicts?

What this mindset of the U.S. as global unpaid policeman does is create the most absurd set of contradictions as even Baker acknowledges.

The crosscurrents can be dizzying. Even as Mr. Obama presses Russia to stop fomenting a virtual civil war in Ukraine, he is trying to collaborate with Moscow in a diplomatic campaign to force Iran to scale back its nuclear program. Even as he pressures Iran over its nuclear program, he finds himself on the same side as Tehran in combating a rising Sunni insurgency in Iraq. Even as he sends special forces to help squelch those insurgents, he is trying to help their putative allies against the government in Syria next door.

I have been saying for some time that the 2016 election has to confront this issue. The American people are tired of meddling in the regional disputes of the world while so many of our own people are out of work and so much needs to be done to repair our failing third world infrastructure. Even Ukraine, is essentially a European problem, as Germany, France and the UK are Russia’s biggest trading partners and the ones with the most influence over Putin. Yes we should negotiate with Iran, in concert with our allies over their nuclear program, but the idea that every civil war in the world is our problem is a dead notion that must be rethought.

Posted in Foreign Policy | Tagged , , , | 1 Comment

Talent Matters

eric-clapton-6444186jpg-e8785d8cbce867ff

Sometime between the popularization of You Tube and the birth of Amazon’s self publishing platform the notion has been bruited about that if you keep at writing books or making videos you will get really good at it. This notion has been popularized by Malcolm Gladwell’s “10,000 hour thesis” which says that if you practice the violin for 10,000 hours you can play at Carnegie Hall. I’ve always thought this was pure bunkum and now some scientists have come forth to rebut this idea.

The new paper, the most comprehensive review of relevant research to date, comes to a different conclusion. Compiling results from 88 studies across a wide range of skills, it estimates that practice time explains about 20 percent to 25 percent of the difference in performance in music, sports and games like chess.

We live in a time that Andrew Keen calls “the cult of the amateur” and as much as I would like to encourage the Eric Clapton wannabes, spending 10,000 hours in your room copying his licks ain’t going to make you a brilliant guitar player. When I was on the road with The Band in the early 1970′s we would inevitably end up at a party after the concert. As the evening wore on the instruments would come out and a jam would start. Where the decent amateur would always come up short was in his (or her) ability to improvise. The ability to react to another player separated the great from the good.

In my book Outlaw Blues, I posited a Gresham’s Law of media–that bad content drives out good. Gresham’s Law is about information asymmetry, which was clarified by George Akerlof in a paper called “The Market for Lemons:Quality Uncertainty and the Market Mechanism”.

Akerlof says that when you are buying a used car you assume the worst—it’s a lemon—in your negotiation stance. Thus the seller of a really good used car always loses out. No one will pay for more than “average quality”. The average consumer of media in our Broadband universe is like the buyer of the used car, she assumes the content is “of average quality” and thus the rise of what Wired Magazine editor Chris Anderson calls Free: The Future of a Radical Price. If the You Tube video I’m about to watch turns out to be a “lemon”, I have lost nothing so long as it is free, except my attention to the Google ad accompanying the video. Does bad content drive out good?

We used to solve this problem by having critics who would weed out the good stuff and warn us to stay away from the dreck. But nobody listens to critics anymore (witness Transformers) so I will default to paying as little as possible for my entertainment, even if that means stealing it.

I still believe in genius. I want to believe “ars longa, vita brevis”–that art is the only thing that lasts, the only way man makes his mark on the ages. Lets stop fooling ourselves that anyone can be a genius–fouling up the Internet with hours of crap. All you have is your own vote as to what’s good and what is not. Don’t waste another second on the second rate.

Posted in Art | Tagged , , , | 6 Comments

Bizarro World 2016

Hillary Clinton & Robert Kagan

Hillary Clinton & Robert Kagan

Something truly odd is happening in the political run up to the 2016 presidential campaign. The signs are everywhere that the classical right -left political alignments are falling apart.

First comes word that some of the key Neo Cons of the right are lining up behind Hillary Clinton, in hopes of a revival of their aggressive military policy.

Even as they castigate Mr. Obama, the neocons may be preparing a more brazen feat: aligning themselves with Hillary Rodham Clinton and her nascent presidential campaign, in a bid to return to the driver’s seat of American foreign policy.

The driver behind this “brazen” move is of course the potential candidacy of Rand Paul as the Republican nominee.

In response, Mark Salter, a former chief of staff to Senator McCain and a neocon fellow traveler, said that in the event of a Paul nomination, “Republican voters seriously concerned with national security would have no responsible recourse” but to support Mrs. Clinton for the presidency.

At the same time that Hillary is tacking to the right, Ralph Nader has released his latest book, Unstoppable: The Emerging Left-Right Alliance to Dismantle the Corporate State, which makes the case that an alliance of left liberals and right libertarians could unite in “opposition to the destruction of civil liberties, the economically draining corporate welfare state, the relentless perpetuation of America’s wars, the sovereignty-shredding trade agreements and the unpunished crimes of Wall Street against Main Street.”

In the face of this kind of rhetoric, Wall Street sees a potential ally in Mrs Clinton.

Mrs. Clinton was the industry’s home state senator, and the financial sector was the second-largest giver to her presidential campaign in 2008. In her post-State Department life, she has been showered with lucrative speaking fees from Goldman Sachs, J. P. Morgan and other financial firms. In her talks, she says it is unproductive to vilify the industry, and she avoids the kind of language that puts off financial executives, as when President Obama referred to “fat cat” bankers in 2009.

Imagine if you will a campaign of Hillary Clinton against Rand Paul in which Hillary and her Neo Con backers defend Wall Street, the NSA, crony capitalism and increasing defense budgets while Rand Paul fights the battle that Nader has laid out. I will be honest that I don’t know Paul’s real record that well, but I’ve got to say that I would think twice before voting for a President backed by the Neo Cons, who as Stephen Walt has pointed out have done untold damage.

From 2001 until sometime around 2006, the United States followed the core neoconservative foreign-policy program. The disastrous results of this vast social science experiment could not be clearer. The neoconservative program cost the United States several trillion dollars and thousands dead and wounded American soldiers, and it sowed carnage and chaos in Iraq and elsewhere

The greatest achievement of the Obama administration has been to remove the Neo Cons from the councils of government. A Clinton restoration of that foreign policy philosophy would be an unmitigated disaster for the country.

Posted in Foreign Policy, Politics | Tagged , , , | 2 Comments

World Cup Collective Consciousness

i

The French Sociologist Emile Durkheim created the concept of “Collective Consciousness” in the 1890′s. The University of Chicago Theories of Media states, “The phrase collective consciousness implies an internal knowing known by all, or a consciousness shared by a plurality of persons.” I thought about that while watching the US-Belgium World Cup Match along with tens of millions of fans around the world. As America begins to take the rest of the world’s version of football seriously, we are joining one of the few global “collective consciousness” happenings. When I think of the big water cooler events in the US–the Super Bowl or the Oscars–they are all really American centric events that may have a global audience, but they do not represent a “knowing known by all”.

So what changed in a America from four years ago during the last World Cup when we were not really part of the Global Village of Football fans? My guess is that the first aspect is that America is increasingly a nation of immigrants and those immigrants have a kind of dual loyalty. They can cheer for the US team and still root for their country of origin. The Annenberg Innovation Lab that I direct has recently done some fascinating work on understanding the different logics of fan engagement in the World Cup. Emotions like pride or mastery only come as you get more involved in the game and that is really beginning to happen among US fans. My guess they will keep watching even though the US has gone out of the tournament.

The second aspect that may have seeded the new audience has been the appearance of the English Premier League games on America television. What is bizarre is that teams like Manchester United have world wide fan communities (especially in Asia) and so this was a peek into the Collective Consciousness. Of course for fools like Ann Coulter, all this interest in the collective consciousness of the globe is downright scary. The cowboy myth of the rugged individual falls apart on the football pitch.

Even though we lost, I think there is a real future for “futbal” in American. Kids like Green and Yedlin are coming up. We played with out our best player, Jozy Altidore and Tim Howard gave one of the greatest goalkeeping exhibitions in history. Some day the US team will be in the World Cup finals.

Posted in Sports | Tagged , , , , | Leave a comment

Could a Revolution Happen in the U.S.?

Labor Movement And An Organized College Walkout Add Support To Occupy Wall Street Protest

Nick Hanauer, the only rich VC who was ever censored by Ted talks, just posted an essay on Politico, entitled The Pitchforks are Coming…for us Plutocrats. He raises the spector of a revolution in America unless the issue of income inequality is addressed.

What everyone wants to believe is that when things reach a tipping point and go from being merely crappy for the masses to dangerous and socially destabilizing, that we’re somehow going to know about that shift ahead of time. Any student of history knows that’s not the way it happens. Revolutions, like bankruptcies, come gradually, and then suddenly. One day, somebody sets himself on fire, then thousands of people are in the streets, and before you know it, the country is burning. And then there’s no time for us to get to the airport and jump on our Gulfstream Vs and fly to New Zealand. That’s the way it always happens. If inequality keeps rising as it has been, eventually it will happen. We will not be able to predict when, and it will be terrible—for everybody. But especially for us.

The image of a combination of Occupy veterans and Tea Party populists marching on the headquarters of JP Morgan Chase with pitchforks is evocative, but for me it remains in the realm of speculative fiction. If you look at the history of inequality in both the U.S. and Europe you come to some pretty clear conclusions. The first is that which political party is in power doesn’t seem to make much difference.

chart-05

Looking at the U.S., from 1810-1910, the rise of the plutocrats was very steady, no matter which party was in power. Then in 1913 the Sixteenth Amendment to the Constitution was passed, allowing an income tax and the share of the top 10% began a slow decline. This movement towards equality was reversed in the the mid 1970′s with the Tax cut revolution that started at the state level  (eg.Prop 13 in California) and continued with Reagan’s cuts to federal income tax rates. From a historical perspective the fact that 90% of the people have never owned more that 38% of the wealth in this country is a bit shocking, but now we have reached a point where the richest 1% of the country owns as much as the poorest 90% of the country.

All of this would seem to be fertile grounds for a populist uprising, and yet it has never happened in America. The reason?

Too much cheap entertainment. Marx never figured on TMZ or the Kardashians. Of course Aldous Huxley in “Brave New World” did understand the power of drugs and entertainment to render a polity so passive that the plutocrats would never have to worry about the pitchfork brigade. 52 million Americans use prescription drugs “non-medically”. Then you have social networking which eats up 3 hours a day for the average user. Then we spend 5 hours a day in front of the TV. 8 hours of sleep and two hours eating, who has time for work, much less marching in the streets?

Much as I would like to think that Nick Hanauer could scare his fellow plutocrats into supporting a major raise in the minimum wage, I am highly skepitcal. I don’t think the Millennial generation, which has the most to lose in continuing the status quo, has any gumption to take to the streets. They are deep in college debt, desperate for work and not interested in rocking the boat.

Posted in Politics | Tagged , , , , | 3 Comments

In Praise of the Beautiful Game

22amazon4-articleLarge

I’m not sure I know why the whole planet is transfixed by the World Cup, but I think its a good thing. Deep in the Amazon jungle, villages running their sole TV off of car batteries gather to celebrate athletic excellence. What distinguishes sporting acheivement from that in other fields, is that it can’t be faked. Brittany Spears can lip sync her Vegas concerts, and  Ted Cruz can pretend to be a statesman, but Cliff Dempsey has to show up and play his heart out with a broken nose for 90 minutes in the steaming heat of Manaus. No excuses. No pretending. The other thing that distinguishes World Cup football from American Football or Basketball is that the athletes are the kind of people you could encounter in an airport and not blink twice. The are not seven feet tall. They do not weigh 300 pounds.

The U.S. audience for this sport is growing and I think the fact that the American team will probably make it through to the next round will help grow the interest in the sport. Of course the US TV networks hate soccer, because there are no regular breaks for commercials, and so they have shunned the sport. But if ESPN’s ratings continue to grow, that may change. And of course, because we are a country of immigrants, it doesn’t really matter how far the US gets in the tournament, because we all have a second team to root for based on some great experience in Brazil, the Netherlands, Mexico or maybe France. The next three weeks will be fun.

Posted in Sports | Tagged , , | 1 Comment

What is So Good About Disruption?

 

Ever since the publication of Clayton Christensen’s 1997 book, “The Innovator’s Dilemma”,  the conventional wisdom in both business school classrooms and corporate boardrooms was that “disruptive innovation” from a new entrant selling a cheaper, lower quality product, would inevitably eat the lunch of the incumbent’s more expensive, higher quality product. Christensen had drawn on the earlier work of Joseph Schumpeter, who coined the phrase “creative destruction” in the 1940′s. In this week’s New Yorker, Harvard historian Jill Lepore writes an epic take down of Christensen’s theory, but for my money she doesn’t go far enough.

Christensen used the disk drive industry to show how new entrants, making cheaper, smaller drives supposedly destroyed the business of the incumbents. But as Lepore points out, it turns out that the incumbents adapted well and a company like Seagate managed to hold on to its market share lead and all the supposed disruptors are gone. What is so wonderful about Lepore’s essay is that it puts the relatively recent concept of disruption in an historical context.

The eighteenth century embraced the idea of progress; the nineteenth century had evolution; the twentieth century had growth and then innovation. Our era has disruption, which, despite its futurism, is atavistic. It’s a theory of history founded on a profound anxiety about financial collapse, an apocalyptic fear of global devastation, and shaky evidence.

When applied to technology companies the notion of disruption has a kind of soulless darwinian feel to it. Who cares if Digital Equipment Company no longer exists? But for those of us involved in the culture business, the gleeful chuckles of the disruptors are disturbing; as they destroy first the music business, then journalism and now turn their sights on the movie and TV business (the one place of continuing cultural innovation). Lepore touches on this.

They are told that they should be reckless and ruthless. Their investors, if they’re like Josh Linkner, tell them that the world is a terrifying place, moving at a devastating pace. “Today I run a venture capital firm and back the next generation of innovators who are, as I was throughout my earlier career, dead-focused on eating your lunch,” Linkner writes. His job appears to be to convince a generation of people who want to do good and do well to learn, instead, remorselessness. Forget rules, obligations, your conscience, loyalty, a sense of the commonweal. If you start a business and it succeeds, Linkner advises, sell it and take the cash. Don’t look back. Never pause. Disrupt or be disrupted.

I am reminded of all of this as I watch You Tube destroy the music business. You Tube has decided to put up a paid music streaming service, but they won’t pay the indie artists like Jack White and Adele what they think is fair and so they will take down the artist’s official free videos, rendering them (just like Amazon’s treatment of J.K. Rowling) invisible. As David Newhoff notes,

 But because the company is all about you and all about free expression, of course, any unofficial videos that make use of these artists’ works as soundtracks will not be targeted for removal by Google.  You’ve got to love a company that can put the screws to an artist and exploit her at the same time while the “fans” applaud the whole stinking mess.  I mean that is some whack stupid evil genius shit right there.

As I have been writing recently, the tendency in the digital world is towards monopoly capitalism. If you were to ask me to invest in a start up competitor to Google or Amazon, I would tell you to not waste your time. All this talk about the wondrous benefits of creative destruction when applied to our culture is a sham. When Lana Del Rey spoke about her creative inspirations recently, it summed up what the disruptors have wrought.

Ms. Del Rey freely cites inspirations including Frank Sinatra, Bob Dylan, Cat Power, Nirvana and Eminem, but none of them emerged in this century. “Think of what’s going on now,” she said. “Where am I going to get my inspiration? I couldn’t think of a thing today that I would really genuinely want to be a part of.”

The greed heads of Silicon Valley may think that the past has nothing to teach them, but they are wrong. In their craving to disrupt everything, they are leaving us a soulless cultural desert.

 

Posted in Art, Entertainment | Tagged , , , , , , , | 5 Comments

Do We Need War to Grow our Economy?

B-32-Bomber-Factory-1944

The economist Tyler Cowen wrote a piece in the New York Times today entitled “The Lack of Major Wars May be Hurting Economic Growth”. He raises a serious point that requires two questions to be answered. First, does modern capitalism rely on military and other “wasteful” expenditures to grow? Second, is growth of 4% per year necessary for the American economy to succeed?

Cowen makes a fairly convincing argument that preparing for war has led to increased growth since the end of the Great Depression.

It may seem repugnant to find a positive side to war in this regard, but a look at American history suggests we cannot dismiss the idea so easily. Fundamental innovations such as nuclear power, the computer and the modern aircraft were all pushed along by an American government eager to defeat the Axis powers or, later, to win the Cold War. The Internet was initially designed to help this country withstand a nuclear exchange, and Silicon Valley had its origins with military contracting, not today’s entrepreneurial social media start-ups. The Soviet launch of the Sputnik satellite spurred American interest in science and technology, to the benefit of later economic growth.

Neoclassical economics would have us believe that the invisible hand of the market in creating a balance of supply and demand will naturally create the kind of growth that makes capitalism the only possible economic system. Thus as we are reminded constantly by Republican economic orthodoxy, government intervention in the economy can only destroy this perfect balance and gum up the works. But Cowen (The Great Stagnation), a conservative economist, is arguing that since 1940 it has been government spending on military technology that made the difference in the post war average of 4% growth and our current relatively stagnant 2% growth. Although Cowen can point to the wonders of the Internet delivered by the Cold War, he admits that the wasteful cost of war (in blood and treasure) is not worth the growth. And then there is another source of waste that we need to look at. In 1950, total U.S. ad spending was $5.7 Billion. Last year it was $171 Billion. Why do I say waste? Because that box of Tide you just purchased had far more embedded costs in advertising and packaging than it did in ingredients (which were basically similar to the ingredients of all the competitive detergents).

Then there is a third source of waste for which we are paying dearly: Wall Street speculation.

Finance-Sector-as-percentage-of-GDP

Note how the role of Wall Street has grown since 1950. The vast proportion of this revenue is trading profits. This is not money going to finance productive growth of the economy, but rather the speculative profits of the trading desks of big banks. It is this speculative activity that caused the crash of 1929 and the Great Recession of 2008. Though the role of Wall Street fell dramatically in 1930, you will note that the Great Recession of 2008 was merely a hiccup in Wall Street Profits, mostly because men like John Paulson made billions betting the housing market would crash. And now, as Michael Lewis has reminded us, High Frequency Trading makes it possible for the Hedge Fund guys to let the computers do all the speculation, often trading in and out of a single stock four times a day.

So perhaps the invisible hand of the free market doesn’t really work without the government spending billions a year on missiles and bombers and the corporations spending billions a year to get you to buy stuff you don’t need. Perhaps Paul Ryan and Ted Cruz are just plain wrong in their belief in the growth fairy of Ayn Rand. But maybe we should look at it another way. Perhaps we don’t need to grow 4% a year. Given certain limits on our natural resources, perhaps a Steady State Economy might be a better idea. Cowen acknowledges this possibility.

We can prefer higher rates of economic growth and progress, even while recognizing that recent G.D.P. figures do not adequately measure all of the gains we have been enjoying. In addition to more peace, we also have a cleaner environment (along most but not all dimensions), more leisure time and a higher degree of social tolerance for minorities and formerly persecuted groups. Our more peaceful and — yes — more slacker-oriented world is in fact better than our economic measures acknowledge.

This of course brings me back to the point I made a couple of weeks ago from Moscow.

The mistake of the old wise men was that they thought man would gladly trade consumption for leisure—that living a modest life, rich in the aesthetics of writing songs or painting our masterpiece—would be a worthy trade.

It could be that we could create a sustainable society at lower growth levels. That there is not a single politician willing to acknowledge this possibility is depressing.

Posted in Economics | Tagged , , , , , , , | 2 Comments

Media and Polarization

PP-2014-06-12-polarization-1-01

The Pew Center released a new poll with some fascinating conclusions. Our country really is far more polarized than ever before. This no surprise but what was fascinating to me is this other chart, which demonstrates how much of the country is not interested in either the extreme partisan position or in participating in a political process they see as fixed.

PP-2014-06-12-polarization-1-04

Even though the percentage of voters on the extreme right and left is growing, it still represents only 20% of the potential electorate. But those who are the most extreme are exactly the folks who turn out at the polls.

Holding deeply negative views of the opposite party and its leaders is correlated with political participation, and this is particularly true among Republicans in the current context. Republicans who hold a very unfavorable opinion of the Democratic Party are 18 points more likely than those whose opinion is mostly unfavorable to say they always vote.

So what is the difference between the relatively benign atmosphere in the early 1990′s and our current poisoned chalice? I would argue that the rise of hard right talk radio and Fox News has made the difference. Andrew Sullivan writes of spending an evening watching Fox News.

Look: I know I may be a total sucker for even hoping to see some semblance of fairness and balance on Fox. But it’s still shocking to see programming designed not to uncover reality, but to create a reality in which no counter-arguments are ever considered, and in which hysteria is the constant norm. MSNBC is almost as bad, of course, but with CNN as the new Discovery Channel, the entire possibility of a balanced newscast has disappeared from cable – and from the lives of most Americans. Again, this is not new. But as it continues, it intensifies. And as it intensifies, the possibility of governing all of the country recedes into the distance.

This is a civil war without violence. And we are two countries now.

However, there may be an interesting development that could radically effect the 2016 election and that is a populist reform revolt against the elites of both parties. Writing in the National Journal, Ron Fournier notes that Eric Cantor’s defeat was not so much a product of a revolt against immigration reform as a revolt against crony capitalism, for which Cantor was the poster child. Fournier quotes Doug Sosnick (Bill Clinton’s political director), who feels the populist anger from both right and left could coalesce around a number of issues.

Which side of the barricade are you on? Populists from the right and the left—from the tea party and libertarian-leaning Rand Paul to economic populist Elizabeth Warren—are positioning themselves among the insurgents. Sosnik pointed to six areas of consensus that eventually may unite the divergent populist forces:

  • A pullback from the rest of the world, with more of an inward focus.
  • A desire to go after big banks and other large financial institutions.
  • Elimination of corporate welfare.
  • Reducing special deals for the rich.
  • Pushing back on the violation of the public’s privacy by the government and big business.
  • Reducing the size of government.

If those six issues are the platform for victory with the vast “silent plurality” that represents the middle of American politics then I’m not sure Hillary Clinton is prepared to embrace this program. Clearly Rand Paul could run there, but my own distrust of Paul as a “Manchurian Candidate” from the Lew Rockwell fringe of Libertarian politics, who is trying his best to look reasonable, makes me demur. Which of course leads back to Elizabeth Warren, who could run a populist campaign that just might be a winner.

Posted in Politics | Tagged , , , | 2 Comments

Does Talent Matter?

Over the weekend 12,500 screaming fans showed up at Citi Field in Queens for DigiFest NYC. They were not screaming in appreciation of some new boy band or rap star. They were screaming for Cameron Dallas, whose only apparent talent is that he looks cute. Cameron is well aware of his limitations.

 “Back in the day, you used to have to be a singer or an actor, but nowadays with social media, you can become well known just by being yourself.”

The devolution of teen fan hysteria can be charted from Frank Sinatra

sinatrafans

To Elvis Presley

screaming-fansTo The Beatles

galleryimage-436090657-mar-1-2012-600x400

We have now arrived at Cameron Dallas.

YOUTUBE-articleLarge

Except that unlike Frank Sinatra, Elvis or The Beatles, Cameron Dallas has no talent. How did we get here? Where the object of these girl’s affection does nothing but look pretty in front of his web cam. Are we so culturally bankrupt that this is the best we can do?

 

 

Posted in Entertainment | Tagged , | 3 Comments